Gold price surges as Fed and geopolitical risks mount

Gold has roared back above US$4,400 an ounce after spending months retreating from its record highs, with the latest rally highlighting renewed concerns over US monetary policy, inflation and geopolitical risk.

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Spot gold was around US$4,400 an ounce on Wednesday, up 0.77%, after climbing more than 8% in just over a week. The move marks a sharp turnaround from last month, when bullion fell below US$4,000 after previously surging above US$5,300.

A major driver of the latest rebound has been weaker US jobs data, which has reduced expectations of a September Federal Reserve rate rise. The Fed recently left rates unchanged, keeping markets focused on whether weaker growth will eventually force policymakers towards easing.

Geopolitical tensions are adding another layer of support. Escalating tensions involving Iran and the Strait of Hormuz have pushed oil prices higher, with Brent around US$89.46 a barrel and US crude around US$83.71.

That creates a difficult environment for central banks, with higher energy prices potentially fuelling inflation while geopolitical uncertainty weighs on economic growth. For Australian gold investors, a sustained higher bullion price could provide a significant tailwind to producers by supporting margins and improving the economics of development projects.

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